The Enterprise Data Center: Not Dead Yet

With the rapid growth of cloud services like Amazon Web Services, it might seem like enterprises would be moving away from running their own data centers. But as it turns out, plenty of enterprises still operate their own data centers even as they move some applications to cloud service providers, according to a new study by 451 Research.

In fact, the firm found that 83% of enterprises surveyed in North America still rely on their own data center or IT site. Only 17% rely solely on cloud service providers or colocation providers, according to the survey of 1,200 senior IT pros familiar with data center operations.

"The reality is that most enterprises still run a data center of some kind," Dan Harrington, research director at 451 Research said in a webinar this week.

Forty-nine percent reported using both their own infrastructure and third parties (cloud or colocation providers), which Harrington said indicates a "hybrid cloud world."

The 451 Research study showed that the typical large enterprise operates eight data centers (including local and regional ones) that are supplemented by15 server rooms and 35 server closets.

Steady data center investments

Some enterprises are even building new data centers: 18% of survey respondents said they expect to build a data center in the next two years. The top driver for building was the need to expand after running out of capacity. Other top reasons cited by those polled included data center consolidation and disaster recovery. There's increased pressure on IT to be prepared for outages in the event of a security breach or natural disaster, and budgets are opening up for disaster recovery, Harrington said.

451 Research found that enterprise facility budgets are holding steady, for the most part. "People aren't slashing their data center budget or facility budget," Harrington said.

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And some enterprises, especially healthcare and finance organizations, are increasing their facility spending. They're spending it mostly on cabinets, racks and cabling, but also operating expenses, power equipment and data center infrastructure management software (DCIM).

Schneider Electric was the top facilities equipment and software vendor cited by those polled. Emerson Network Power also rated highly, especially for computer room air conditioning.

Cloud shift

While enterprises continue to invest in their facilities, though, they're also making increased investments in cloud and colocation providers, 451 Research found. When enterprises run out of capacity, 62% said they would consolidate their IT infrastructure to accommodate growth and 41% said they'd use an IaaS, SaaS, or PaaS provider. Thirty-five percent said they'd rent space at a colocation provider.

"Enterprises on average still maintain a large number of sites while working to consolidate them, looking to run them more efficiently and taking the cloud into account for future growth," Harrington said.

Enterprises are closing many of their smaller, local data centers and server rooms and shifting to a more centralized model, he said. Nearly 37% of organizations that are increasing their spending are upgrading or retrofitting existing facilities to support increased reliability demands and to support dense IT equipment such as converged infrastructure.

The survey showed that close to 50% of organizations are deploying production applications in the cloud. "We think this represents a market on the cusp of maturity," Harrington said.

In three years, one in five applications will be deployed at cloud service providers and one in seven will be deployed at a colocation provider, according to the study. Retail and service firms were the most likely to move applications to third parties while healthcare and public- sector organizations were the least likely. Amazon, Microsoft, and Salesforce were the top cloud providers cited by those polled.

By 2018, 50% of all server racks in North America will be located at cloud and colocation data centers, up from 40% today, the study indicated.

"Enterprises continue to invest in their own facilities, but make no mistake, the cloud is coming," Harrington said.